Algeria: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Algeria

ALGERIA IMFCountryReportNo.24/88 April2024 2023ARTICLEIVCONSULTATION—PRESSRELEASE;STAFFREPORT;ANDSTATEMENTBYTHEEXECUTIVEDIRECTORFORALGERIA UnderArticleIVoftheIMF’sArticlesofAgreement,theIMFholdsbilateraldiscussionswithmembers,usuallyeveryyear.Inthecontextofthe2023ArticleIVconsultationwithAlgeria,thefollowingdocumentshavebeenreleasedandareincludedinthispackage: APressReleasesummarizingtheviewsoftheExecutiveBoardasexpressedduringitsMarch27,2024considerationofthestaffreportthatconcludedtheArticleIVconsultationwithAlgeria. TheStaffReportpreparedbyastaffteamoftheIMFfortheExecutiveBoard’sconsiderationonMarch27,2024followingdiscussionsthatendedonDecember14,2023,withtheofficialsofAlgeriaoneconomicdevelopmentsandpolicies.Basedoninformationavailableatthetimeofthesediscussions,thestaffreportwascompletedonMarch8,2024. AnInformationalAnnexpreparedbytheIMFstaff. AStatementbytheExecutiveDirectorforAlgeria.Thedocumentlistedbelowhasbeenorwillbereleased. SelectedIssues TheIMF’stransparencypolicyallowsforthedeletionofmarket-sensitiveinformationandprematuredisclosureoftheauthorities’policyintentionsinpublishedstaffreportsandotherdocuments. Copiesofthisreportareavailabletothepublicfrom InternationalMonetaryFundPublicationServicesPOBox92780Washington,D.C.20090Telephone:(202)623-7430Fax:(202)623-7201 E-mail:publications@imf.orgWeb:http://www.imf.org InternationalMonetaryFundWashington,D.C. ©2024InternationalMonetaryFund PR24/100 IMFExecutiveBoardConcludes2023ArticleIVConsultationwithAlgeria FORIMMEDIATERELEASE Washington,DC–March29,2024:TheExecutiveBoardoftheInternationalMonetaryFund(IMF)concludedtheArticleIVconsultation1withAlgeriaonMarch27,2024. TheAlgerianeconomywasstillemergingfromtheCovidpandemicwhenspilloversfromRussia’swarinUkraineandrecurrentdroughtspushedupinflation,whilehighinternationalhydrocarbonpricesboostedgovernmentrevenueandexports.TheAlgerianeconomyisestimatedtohavegrownby4.2percentin2023,arobustperformanceowingtoareboundinhydrocarbonproductionandstrongperformanceintheindustry,construction,andservicesectors.Theexternalpositionremainedsolidwithacurrentaccountsurplusforthesecondyearinarow.However,inflationpressurespersisted(primarilyduetohighfoodprices)andmonetarypolicyremainedaccommodative.Thefiscaldeficitisestimatedtohavewidened,albeitlessthanforeseeninthe2023revisedbudgetbecauseofrelativelyslowexecutionrates. Thenear-termoutlookisbroadlypositive,butinflationremainsaconcern.Realgrowthisforecasttoremainstrongin2024,at3.8percent,supportedinpartbylargefiscalspending.Inflationwouldstarttodecelerate,particularlythankstoeasingfreshfoodprices,althoughentrenchmentatarelativelyelevatedlevelisaconcern.Thecurrentaccountsurplusisprojectedtonarrowfurtherin2024ashydrocarbonpricesdecline. Medium-termeconomicprospectshingeoneffortstodiversifytheeconomyandtheabilitytoattractprivateinvestment,andaresubjecttoseveralrisks.Risksonthedownsideincludestubborninflation,volatilityininternationalhydrocarbonprices,fiscalrisksfromcontingentliabilities,largebudgetaryfinancialneeds,andrisingpublicdebt.Extremeclimateeventswouldaffecttheeconomyandthebudgetwhileadisorderlyenergytransitionisalonger-termrisk.Ontheupside,sustained,bold,anddeepstructuralreformsandresoluteeffortstodiversifytheeconomy,improvethebusinessclimate,attractinvestment,andtapnewexportmarketscouldspurgrowthandjobcreationfurther. ExecutiveBoardAssessment2 InconcludingtheArticleIVconsultationwithAlgeria,ExecutiveDirectorsendorsedstaff’sappraisalasfollows: ExecutiveDirectorsagreedwiththethrustofthestaffappraisal.TheywelcomedAlgeria’ssustainedsolidgrowthandexternalposition,despitemultipleeconomicheadwinds.Whilethenear-termoutlookis 1UnderArticleIVoftheIMF'sArticlesofAgreement,theIMFholdsbilateraldiscussionswithmembers,usuallyeveryyear.Astaffteamvisitsthecountry,collectseconomicandfinancialinformation,anddiscusseswithofficialsthecountry'seconomicdevelopmentsandpolicies.Onreturntoheadquarters,thestaffpreparesareport,whichformsthebasisfordiscussionbytheExecutiveBoard. 2Attheconclusionofthediscussion,theManagingDirector,asChairmanoftheBoard,summarizestheviewsofExecutiveDirectors,andthissummaryistransmittedtothecountry'sauthorities.Anexplanationofanyqualifiersusedinsummingsupcanbefoundhere:http://www.IMF.org/external/np/sec/misc/qualifiers.htm. 2 broadlypositive,inflationremainshighanddownsiderisks,includingfromvolatilecommoditypricesandclimatehazards,requirecontinuedvigilance.Inthiscontext,Directorsemphasizedthatasoundpolicymix,accompaniedbysustainedimplementationofreformstodiversifytheeconomyandreduceclimaterelatedrisks,willbenecessarytoensuremacroeconomicstabilityandpromoteinclusiveandsustainablegrowth. Directorswelcomedtheauthorities’commitmenttomedium-termfiscalsustainability.Notingtheimportanceofmaintainingsocialequity,theyindicatedthatthelargeprojectednear-termfiscaldeficitandfinancingneedscouldincreasefinancial,fiscal,andinflationaryvulnerabilities.Inthisvein,theyencouragedtheauthoritiestograduallyrebalancefiscalpolicytohelppreservebuffersandimprovefiscalanddebtsusta